Icahn’s Motorola Patents Push Adds $600 Million to His Stake

Icahn’s Push on Motorola Patents Adds $600 Million to Value
In February 2008, Carl Icahn and his affiliates reported that they had purchased 114.3 million shares of Motorola Inc. for $1.78 billion, or about $15.58 a share. Photographer: Chip East/Bloomberg

Billionaire Carl Icahn’s efforts to get Motorola Mobility Holdings Inc. to review options for its patents added almost $600 million to the value of his company stake following Google Inc.’s $12.5 billion buyout.

Icahn and his affiliates hold 33.5 million shares, the equivalent of an 11.4 percent stake, in the Libertyville, Illinois-based mobile-phone company. That stake is now valued at about $1.34 billion under the deal announced today, in which Google will acquire Motorola Mobility for $40 a share in cash.

The shareholder activist, having invested about $3.05 billion in Motorola Inc. common stock since 2008 and successfully lobbied the former company to spin off its mobile-phone business, may be close to breaking even on the overall bet, according to regulatory filings. Icahn’s holdings in Motorola Mobility and its sister company, Motorola Systems Inc., may be valued at about $2.9 billion as of today, filings show.

“Obviously, in 2008, we purchased the stock at too high of a price,” Icahn, 75, said today in an interview with Bloomberg Television’s “Street Smart with Carol Massar and Matt Miller,” adding that his firm later paid as little as $3 a share for Motorola stock. “We averaged it down and were pleased with the results.”

Icahn manages his own money through New York-based Icahn Capital LP. It’s possible his overall gains or losses on Motorola were affected by financial contracts or securities that didn’t have to be disclosed under U.S. securities laws. The above figures don’t include any dividends he received on Motorola stock.

Meeting With Management

The billionaire disclosed in a regulatory filing last month that he had met with Motorola Mobility to urge management to “explore alternatives” for the company’s more than 17,000 patents. On July 20, the first day that Icahn reported having discussions with Motorola Mobility, company shares closed at $22.41, giving his stake a market value of about $750.9 million.

Icahn’s initial meeting with Motorola last month followed a July 1 announcement that a group of six technology companies, including Apple Inc., Microsoft Corp. and Sony Corp., would pay a combined $4.5 billion to acquire more than 6,000 patents from Nortel Networks Corp.

Motorola Mobility’s “patent portfolio, which is substantially larger than Nortel Networks’ and includes numerous patents concerning 4G technologies, has significant value,” Icahn said in a document filed July 21 with the U.S. Securities and Exchange Commission. “There may be multiple ways to realize such value given the current heightened market demand for intellectual property in the mobile telecommunication industry.”

Separation Push

“Motorola is activism at its best,” Icahn said earlier today in a news release. “We have been strong proponents of the company exploring multiple ways to enhance the value of its patent portfolio.”

Icahn’s press release today didn’t mention whether he played a role in brokering the deal between Motorola and Google. Icahn acquired a stake in Yahoo! Inc. in 2008 and unsuccessfully tried to resuscitate a deal between the company and Microsoft, which had previously bid more than $40 billion for the Web portal.

In February 2008, Icahn and his affiliates reported that they had purchased 114.3 million shares of Motorola Inc. for $1.78 billion, or about $15.58 a share. He subsequently added to his stake and pushed the company to separate into Motorola Mobility and Motorola Solutions Inc. -- a step that was completed in January.

$3.10 at Bottom

When the stock market collapse reached its nadir in March 2009, Motorola shares traded for as little as $3.10 each, unadjusted for subsequent splits and spinoffs. Under a reverse stock split announced in November 2010, Motorola issued one new share for every seven held by investors.

In addition to his Motorola Mobility stake, Icahn and his affiliates owned about 38.3 million Motorola Solutions shares as of March 31, according to Form 13Fs filed with the SEC on May 16. With Motorola Solutions shares trading at $40.58 each at 4:15 p.m. Washington time, Icahn’s Motorola Solutions shares have a market value of about $1.55 billion.

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